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Past failures on spending targets dampen India's 2021 budget hopes While increasing public expenditure is key to revive the economy from the pandemic-induced slump, falling tax revenues mean Sitharaman will have thin resources
Indian Finance Minister Nirmala Sitharaman’s promise of delivering a budget like no other on Monday stoked hopes of a much-needed spending boost. But if the past is any guide, the reality may disappoint. The government has missed its total spending targets in the past two years, or even scaled them down, and has failed to meet goals for some of its flagship development programs, a review of Budget cuments show.
While increasing public expenditure is key to revive the economy from the pandemic-induced slump, falling tax revenues mean Nirmala Sitharaman will have thin resources. Borrowing has already risen to a record 13.1 trillion rupees (about $180 billion) in the current financial year to March, widening the fiscal deficit and putting its sovereign rating under scrutiny. A program to improve roads in the hinterland, started in 2000 as part of a poverty reduction strategy, was widely lauded for connecting isolated hamlets and allowing small businesses to deliver faster. Spending has been scaled down even as India’s Budget 2021 increased over the years. Raising expenditures on rural infrastructure could be a boon as the government bets on rural communities to rescue the economy, while it also seeks to defuse sustained protests from farmers angry over agricultural reforms.